Fed Announces LARGE TREASURY PURCHASE!

Posted on Sunday, November 7th, 2010 at 11:48 pm.

The Federal Reserve today announced its intention to purchase $600 Billion of 3 to 10 year treasury bonds between now and June 2011. Some of you may be wondering how the Federal Reserve purchasing US treasury bonds can do much..aren’t we just borrowing more money to buy U.S. Debt? The answer is no, the Federal Reserve actually just prints money to purchase these bonds, so they are not borrowing it. Don’t you feel better? The last time this type of monetary policy was used in bulk was during the late 70’s Carter administration when interest rates jumped to 21%. The Federal Reserve printing money is inflationary by nature…so the Fed apparently isn’t concerned with inflation and there are hints that the Obama administration may be lobbying for this type of inflationary policy to try and spur demand the old fashioned way…..just like the Carter administration did!

Now, how much is too much? The Fed doesn’t seem to ever get that right so a justified amount of fear is probably prudent. However, the Fed out competing to buy US debt means that there is more competition for US Mortgage Debt so interest rates are going to WIN BIG in this environment so get ready to BUY or REFINANCE with 30 years rates close or at 4.0%! That’s right, 4.0% or darn close to it is a possibility! You need to be ready to LOCK THOSE RATES so give us a call today and we’ll get your mortgage application started!

Helping our client’s get the best rate on their mortgage, or refinance without adding a bunch of unnecessary fees to your existing loan balance is how we add value to our clients and keep them for life. We’ll help you design the best mortgage program for you and give you all the options so you can choose what’s best for you, not what’s best for your mortgage broker. Check out our mortgage page today and start your loan application online if you want!

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